MnPASS and Variable Dynamic Pricing

Chunying Xie, a doctoral student in the Department of Economics in the College of Liberal Arts at the University of Minnesota, was awarded the 2012 CURA Dissertation Research Grant. The grant provides one year of support to a Ph.D. candidate in good academic standing at the Univer­sity of Minnesota for the purpose of completing dissertation research on a significant issue or topic related to urban areas in the upper Midwest region.

Xie’s research focuses on the MnPASS program’s dynamic pricing mecha­nism. Minnesota has been a pioneer in introducing dynamic pricing into its highway network, beginning with the introduction of the MnPASS program on Interstate 394 in 2005. Motorists who wish to use the special-access MnPASS lanes are charged a variable price that changes every three minutes based on current traffic conditions. If traffic is light, access to MnPASS lanes may cost only $1.25; during heavily congested rush hours, the price could rise to $8.00. This variable pricing mechanism serves an important economic allocation function, ensuring that the price is not so high that it discourages use of the MnPASS lanes, resulting in underutiliza­tion, and not so low that it encourages too many vehicles to use the lanes, resulting in congestion that slows buses and carpools.

Xie’s research will model how indi­viduals respond “on the fly” to variable prices for MnPASS lanes using a newly available dataset from the Minnesota Regional Transportation Management Center. The dataset includes data in 30-second intervals on traffic volume, congestion, and speed for every lane, entrance, and exit on Interstate 394, as well as corresponding data on the MnPASS lane prices that drivers would have seen at every instant. The model will allow Xie to evaluate the traffic-efficiency gains of the program for drivers in the MnPASS lanes and regular lanes, and provide recommendations for modifying the pricing formula MnPASS uses to make the program more efficient.

An article summarizing Xie’s disser­tation research will appear in a future issue of the CURA Reporter.